Treasury Secretary Jack Lew blamed European leaders Wednesday for failing to pursue economic reforms in their countries, in a statement of U.S. concern about global growth ahead of this weekend's meeting of G-20 advanced nations in Brisbane, Australia.
"The world cannot afford a European lost decade," Lew said, speaking at an event hosted by the World Affairs Council of Seattle in Washington.
In his remarks, Lew boasted that total U.S. spending has surpassed its pre-financial crisis peak, something that is not true for Europe, and that "we have created more jobs since the pre-crisis peak than Europe and Japan combined."
With unemployment above 11 percent in the euro zone and output growth and inflation near zero, Lew said, Europe's failure to pursue monetary and fiscal stimulus and labor reforms puts the global economy at risk.
In particular, he called on the governments of Italy and France to overhaul their labor market policies, which he said make them "structurally less competitive."
But he also called out both Germany and the Netherlands for running trade surpluses without engaging in fiscal stimulus to aid their neighbors. Lew has criticized Germany in the past for relying on demand from other European countries to fuel its export-driven economy without pushing for greater monetary or fiscal stimulus.
Not only do Germany and the Netherlands need to engage in stimulus, Lew said, "the scale of the fiscal effort needs to reflect the urgency of addressing today’s demand shortfall."
Later in his speech, Lew warned that the "math just doesn’t add up for every country to rely on external demand to fuel its own growth," calling for countries to maintain market exchange rates, a comment likely directed at China. "Beggar-thy-neighbor policies are not the solution to present global economic challenges," he added.
Lew and President Obama will travel to Brisbane this weekend where they will meet other countries' officials face-to-face. Near the top of the agenda for Lew are likely to be trade considerations, as well as coordinating on financial affairs.